TWO MARKET DATA GURU 2023 PREDICTIONS COMES TRUE
We have long believed Google, AWS, and Microsoft would make their move into the world of market data and financial information and in 2023 predicted there would be more deals, and the first two arrived swiftly. It was little surprise to read that:
1.AWS and S&P Global entering into a partnership, and
2.Deutsche Börse Group (DBAG) and Google Cloud announcing a strategic partnership to ‘accelerate innovation’
The first was the cloud providers would seek out more high value finance related content from original data sources, and the second that DBAG would be the next exchange to jump on the bandwagon.
What this means is the behemoths of big tech are partnering with the titans of the exchange and financial data world, AWS with NASDAQ and now the world’s number one market data vendor by revenue (important note: core services are own IP data like indices and ratings), S&P Global, Google dancing with CME and now DBAG, with Microsoft launching an ambitious relationship with LSEG.
Five common denominators to each deal:
- All are for 10 years in duration with the Cloud providers delivering connectivity with data sources providing content
- Each PR statement highlights the marriage of infrastructure with data and analytics
- The content providers are all the owners of their own content, i.e. are the primary data sources in their own and OTC markets
- In addition, the content owners all offer profitable value added services beyond the simple provision of their own price data
- The strategies of all these businesses, Big Tech and Big Data are about growing their client base through greater, easier accessibility
The Google/CME and Microsoft/LSEG agreements have taken one further step with Big Tech taking stakes in the exchange groups.
BIG MEETS BIGGER
These deals are Big Tech teaming up with Big Exchanges/Data Sources. It brings together distribution with content backed by services.
On the Cloud Side, market data content owners are faced with an oligopoly. IBM’s Azure, the fourth of the large providers has yet to make a move, and its options are becoming limited as the Tier 1 exchanges with a broad enough portfolio of data and services yet to announce a tie up shrinks to just ICE and Euronext. It is unlikely western exchanges, or for that matter financial institutions will do preferential deals with China’s Cloud providers, Alibaba and Tencent. However, HKEx, and smaller regional exchanges might entertain such an arrangement, though while they have some data they do not have, or offer, the analytics and services that adds value.
Therein lies the problem for other exchanges and data sources, they could be relegated to the role of content fodder because they have little to offer beyond straight price data, which is insufficiently attractive alone. They could well become squeezed out because the key is value added services, i.e. analytics.
This leaves the number of interesting market data content owners with global presence limited to the afore mentioned ICE, Euronext, plus Moodys, Morningstar, MSCI, and Nikkei.
It seems in 2023 we shall see how the teams line up behind the Captains of the The Cloud, with the star data content players already being picked first, then possibly like in the school yard, the rest are chosen.
The next question is ‘should the data consumers be worried?
We discuss in the next article.
For information on our consulting services please email knharris@datacompliancellc.com
Keiren Harris 16 February 2023
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